Indian Companies Hedge Against Rupee Weakness

Indian companies are increasing their protection against a possible fall in the rupee, indicating that concerns over the currency remain despite measures taken by the Reserve Bank of India to support the economy. Importers booked nearly $77 billion in currency hedges in September, the highest monthly amount on record.

The September figure was more than 80% higher than a year earlier, while exporters booked around $41 billion in hedges, up 77%. The growing gap between importer and exporter hedging activity suggests that businesses continue to expect pressure on the rupee in the months ahead.

The rupee has weakened around 6.5% so far this year, making it one of Asia’s weaker-performing currencies. Higher oil prices, global bond market pressures and continued foreign selling of Indian equities have added to the pressure, increasing reliance on central bank intervention.

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